Release Windows' Death Spiral

In the movie distribution business, nothing is more sacred than the three- to four-month release window mandated by theater operators. Significantly curtail that theatrical exclusivity and a major studio risks unwavering wrath in the form of pulled signage, screeners and boycotts.

When Universal Studios Home Entertainment in 2011 announced it would offer Tower Heist on premium VOD just 21 days after its Nov. 4 theatrical launch, the movie chains rebelled and analysts lambasted Comcast’s $60 asking price.

Heist remains the highest-profile title earmarked for PVOD. Theaters operators threatened to boycott the movie during its planned 3,367-screen nationwide opening weekend. They also pledged to remove theater signage of any other film destined for PVOD.

Universal dropped PVOD plans for Heist a week later — a prudent decision considering consumer interest in paying outsized fees to watch a movie just weeks removed from its less-expensive theatrical run was wishful thinking.

But 2011 was a long time ago in an era of rapidly evolving technology. With cloud-based digital storage common, underscored by virtual DVRs and the rise in subscription streaming services, how much longer can theatrical chains sustain artificial exclusivity to content at a premium price?

To Richard Greenfield, analyst with BTIG Research in New York, the answer is 10 years, if not sooner.

In a Sept. 2 blog post, Greenfield contends the need to own content has been replaced by ubiquitous access and consumers willing to pay for it. Despite ongoing efforts by theatrical chains to enhance the movie-going experience through digital screens, 3D and enhanced sound, improvements in HDTVs and an influx of episodic content available via over-the-top video services is undermining the clout of the theatrical window.

“Spend eight hours watching season one of 'True Detective' back-to-back on HBO Go; you would be hard-pressed to find a [theatrical] movie that is as compelling to watch,” Greenfield wrote.

Indeed, watching “True Detective” requires either a subscription to a multichannel video program distributor, access to a physical or virtual DVR, and/or purchasing the entire season on disc.

A slumping summer domestic box office due in part to consumer indifference toward release slates — with theatrical revenue growth limited to foreign markets — is obscuring in part secular declines in the movie theater business model, according to Greenfield. Indeed, SVOD original programing that focuses on episodic shows; not movies, continues to undermine the box office.

“By 2024, we believe the concept of a multi-month window between a movie’s theatrical and home entertainment release will no longer exist,” Greenfield wrote.

The analyst believes theatrical chains will partner with third-party efforts in offering global day-and-date release windows in order to capture as much of consumer entertainment spending up front. A-la-carte content will be supplanted by less expensive subscription services offering unlimited programing.

“Movie studios will need to morph into television studios … [telling] ongoing stories,” Greenfield wrote. “Whereas the movie industry has resisted change in the past decades, major change over the next decade feels inevitable.”